Six key lessons we learned from executing our own succession plan that can be applied to an advisor’s business.
There’s no better feeling than reaping the rewards of a business you’ve nurtured over many years by passing it along to the next generation of leadership.
That can only happen, though, through a carefully orchestrated succession plan, one defined and executed over time, along with a good dose of thought, conversation, training, coaching and emotion.
I was part of that process myself recently, taking over for my mother, who is stepping back from being CEO of the company she started almost 30 years ago. One of the things our entire leadership team learned early on was that it was not something we could do on our own.
An equally important lesson was to take our time. The process is far too important to rush.
We also learned many other important lessons advisors can easily apply to their succession plans. Here are six of them.
Years of apprenticeship, demonstrating a willingness to go above and beyond.
Developing and mentoring a successor is a years-long endeavor requiring patience and persistence. Junior advisors must invest time doing virtually every job at the firm, taking on roles and responsibilities before being called upon, even when it means operating outside their comfort zone. That’s why I always tried to do work associated with someone above me in the leadership hierarchy. This approach furthered my growth, with others sometimes taking a step back and allowing me to figure things out for myself.
Don’t look for a “mini me.”
Consciously or not, founders will sometimes recruit successors who are clones of themselves. “My business has been a success. Why not find someone like me to run it in the future, right?”The issue is that high achievers tend to have outsized reputations within their industries. My mom certainly does. Therefore, if I tried to be her, it could invite comparisons that I may struggle to live up to. I’ve learned a lot from her over the years and will continue to lean on her, but I need to be authentic, including developing my own voice and leadership style. Next-gen leaders of advisory firms should strive to have a similar relationship with their mentors.
Embrace the next-gen’s previous work history and experience.
It’s possible, if not likely, that good succession candidates will have work experience that transcends wealth management or even financial services. That can be a good thing. It may mean they have skills, expertise and perspectives that complement the firm’s existing strengths, which could lead to the evolution of its offerings or the development of new ones. For example, I leaned on some of my past experience in banking to develop a more data-driven approach to analyzing our business. Sure, my mom was a successful entrepreneur by that point, and her way of doing things had served her and our clients well, but, to her credit, she understood there’s always room for incremental improvement.
Age is an issue only if you let it become one.
Many firm founders take almost a Goldilocks approach to selecting a successor, prioritizing someone young enough to lead the firm well into the future, but not so youthful that it raises questions about their qualifications. It’s important, however, not to let perception shape too much of your decision-making process. I was 25 when I joined our company and suffered a bit from imposter syndrome at the time. But it quickly became clear to clients that I had put in the work to develop expertise in our field and not only could help them think strategically about their businesses but wanted what was best for them. Don’t worry about a successor’s age. Be more concerned whether they share your values, have a strong work ethic and will lead with integrity.
Be honest about and overcommunicate your plans.
Be open and honest with clients, staff and other key partners about your succession plans. If anything, err on the side of sharing too much. Founders often keep their succession plans close to the vest, not wanting to spook key stakeholders. Guess what? Everyone knows you’re going to retire eventually. Therefore, you’re better off proactively sharing what the next generation of leadership will look like. Not only will people appreciate the transparency, but it will also allow everyone to gradually get to know your successor. Otherwise, it’s a shotgun wedding—and those don’t usually produce the best marriages.
Start early.
There’s no hard and fast rule about when to start looking for a successor, but it’s typically a good idea to do so well before you think it’s appropriate. It takes time for a would-be leader to get up to speed, with the apprenticeship timeline often lasting as long as a decade. Another consideration: Your first pick may not work out, so it may take more than one try to get things right. Yes, it’s possible my mom could have decided she picked the wrong person to lead our business forward.
Succession planning often takes a back seat to business development for many advisors. Firm owners should recognize that succession planning is business development. Indeed, if your business doesn’t have continuity, growth will eventually be impossible to achieve.
So, if you haven’t started down that road, now is the time to look forward to help to ensure your legacy endures—it’s far easier to develop and execute a successful succession plan than you might imagine.
As seen on Barron’s…
